Hoskin Financial Planning Auto Enrolment Overview

1. Auto enrolment – An overview
Why?
It is estimated that there are around 7 million people in the UK who are
currently not saving enough for their retirement. In a bid to encourage
individuals to save for their own retirement Automatic Enrolment and new
pension legislation is being introduced.
Employer duties
From Oct 2012 employers will be affected by the change in legislation whether
they have an existing scheme in place or not. Employers will need to register
with The Pensions Regulator (TPR) and provide details of their workforce and
pension scheme they plan to use to satisfy their duties.
The employer’s duties towards the new legislation will be introduced in stages
from October 2012. The date an employer will be affected is known as their
‘staging date’; this date will be based on the number of people in a workforce
i.e. the larger employers with larger number of employees will be affected first.
There will be different employer duties for different types of worker depending
on earnings and age. Employers will need to automatically enrol some
employees into a pension scheme and arrange membership for others. The
employer will need to assess their workforce on a regular basis and keep records
of the automatic enrolment process and provide these records to TPR, if
requested.
Minimum pension contribution levels will be phased in over five years from
October 2012 starting at 1% contribution each from worker and employer rising
to 5% worker and 3% employer.
Employers should avoid
As part of the legislation, there are a number of things an employer must NOT
do, for example:-
• Give advice to their employees
• Discourage membership of a pension scheme
• Encourage workers to opt out
Also, an employer must not use ‘prohibited recruitment conduct’ i.e. recruit an
individual on the basis that they will opt out of the pension.
The new legislation and employers duties within it are not an option. TPR will be
ensuring that employers comply with their duties and will educate and
encourage employers to get it right. However, if employers fail to comply, fines
and even imprisonment could be imposed.

2. Summary
Auto Enrolment is designed to get more people saving for the future
Employers must have some sort of pension provision for all employees
Employers need to identify their staging date – this determines when their
employer’s duties will apply
Employers will have to set-up and contribute to a pension scheme
suitable for automatic enrolment
Employers must assess their workforce to determine which duties they
need to carry out
Employers will have different duties depending on the types of worker
they employ
Employers will need to keep records of how they’ve met and continue to
meet their duties
The Pensions Regulator (TPR) will ensure employers comply with the new
duties and impose penalties on those who don’t
Auto enrolment is happening, it will not go away and the quicker an employer
seeks advice from their financial adviser the better prepared they will be for
what lies ahead.
Hoskin Financial Planning is an Appointed Representative of Julian Harris Financial Consultants,
authorised and regulated by the Financial Services Authority No. 153566